Sometime around age 50, the average American can now expect their household net worth to exceed $1 million.
How do so many people in their 50s become millionaires?
Household wealth has swelled at a record pace during the pandemic. Between 2019 and 2022, the median net worth of American families jumped 37% to $192,900, after adjusting for inflation. It's the largest rise ever recorded by the federal Survey of Consumer Finances, which was released last fall. Rising home values and rising stock ownership have fueled the rally.
Some of the new numbers are startling. The average household net worth is now $500,000 for Americans in their late 30s. In the late 1940s, it exceeds $750,000. For fifty, it reaches seven figures.
If you're 50 and not worth a million dollars, don't despair. These numbers are average numbers, and the wealthy are pushing them significantly higher.
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The “average” American family – imagine the middle number in a long list of numbers – achieves a net worth of about $300,000 between the ages of 50 and 59, a far cry from $1 million.
Here's how net worth breaks down, decade by decade
To illustrate how wealth has accumulated over the years, here's a decade-by-decade breakdown of America's net worth.
twenties thing
- Average net worth: $120,896 (ages 20-24), $120,185 (ages 25-29)
- Average net worth: $10,800 (ages 20-24), $30,160 (ages 25-29)
In our 20s, most of us are just starting out. We work our first jobs for relatively low wages. We recover from student debt. On the upside, we probably don't have a lot of other expenses.
“You're out on your own for the first time,” he said. Liz Gillette, a certified financial planner in Edgewater, Maryland. “You have obligations coming up, like your first car, and your student loans. And then, you're just building your way toward saving for retirement.”
For people in their 20s, “the biggest factor is debt,” he said. Jonathan Swanberg, a certified financial planner in Houston. “You've racked up a bunch of school debt, and you haven't had the opportunity to work, so your net worth is often negative. You're just trying to get out of the hole.”
Thirty something
- Average net worth: $258,073 (ages 30-34), $501,289 (ages 35-39)
- Average net worth: $89,801 (ages 30-34), $141,200 (ages 35-39)
Thirty Americans may have gotten out of college debt, purchased a first home and started a family. Their income is probably going up, but so are their expenses: think diapers.
“Let's say they've accomplished getting rid of most of their debt,” Swanberg said. “They're starting to put some money into their 401(k). That basically starts the process of getting on the positive side.
Many people in their 30s begin to experience the miracle of compounding: watching the investments they made in their 20s rise in value more and more, as interest accumulates on both the initial investment and the interest already earned.
Compound interest helps explain how the average net worth reaches $500,000 for people in their late 30s.
“I probably started investing at 25,” Gillette said. “You're 35 now. This money now has 10 years to grow.”
1940s
- Average net worth: $590,718 (ages 40-44), $781,923 (ages 45-49)
- Average net worth: $134,730 (ages 40-44), $212,800 (ages 45-49)
When we reach our 40s, that house we bought in our 30s builds serious equity, as the balance of mortgage payments shifts from interest to principal. We are entering our highest profitable years. If we have children, they become more expensive.
“Maybe people got married, bought a house, had kids,” he said. Peter Lazarov, a certified financial planner in St. Louis. “This is what I would call full-fledged adults.”
Home equity and appreciation help push average net worth toward the upper six figures, along with the doubling miracle mentioned above.
“If you have a 30-year mortgage, you're probably halfway done with it,” Swanberg said.
Fifty something
- Average net worth: $1,132,532 (ages 50-54), $1,442,075 (ages 55-59)
- Average net worth: $272,800 (ages 50-54), $320,700 (ages 55-59)
Welcome to Millionaires Row. In their 50s, many Americans reach the legendary status of millionaire, with their family assets worth at least $1 million more than their liabilities.
Our home may now be the prize we own, rising in value as we enter the final years of our mortgage. If we started saving for retirement in our 20s, our 401(k) would be great, after earning 5% to 10% returns for many years.
“By the time you're in your 50s, most of what's in your retirement account is compound interest,” Lazarov said.
Your kids may be in college, which is one of the biggest expenses you'll ever make. But then they're done, and your nest is empty. You need to start seriously planning for retirement.
“There seems to be something magical about turning 50 and saying, ‘I better get myself ready here,'” Gillette said.
Sixty something
- Median net worth: $1,675,214 (ages 60-64), $1,836,884 (ages 65-69)
- Average net worth: $394,010 (ages 60-64), $394,300 (ages 65-69)
This is the decade in which average net worth reaches its peak, a figure approaching $2 million for Americans in their late 60s.
Our 60s are when many of us retire and begin withdrawing our accumulated wealth.
“You ask [people] “To flip the switch and suddenly start spending their money,” Gillette said.
However, for wealthy families who have decades of investments to draw from, “they live on the income,” she said. “You don't even touch the principal.”
Seventy something
- Median net worth: $1,714,085 (ages 70-74), $1,629,256 (ages 75-79)
- Average net worth: $433,100 (ages 70-74), $341,300 (ages 75-79)
In their 70s, Americans are watching their net worth finally begin to decline.
Maybe we're not working anymore, and we're gradually depleting our retirement nest egg. Many expenses are dwindling, but others are rising — especially health care.
“You're now in the spending phase, where you're withdrawing your 401(k) instead of building it,” Swanberg said.
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Wealthier families may still earn more than they spend: a $1.5 or $2 million retirement fund can generate significant income. Less wealthy families may rely on Social Security.
If you're approaching your 70s and don't have a seven-figure net worth, you're not doomed to live out your days in poverty, experts say: Every budget is different.
“The amount of money you need depends entirely on how much you spend,” Swanberg said. “A person who has below average but does not spend much can be very wealthy.”
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